OCC Steps Up Permitting Banks to Utilize Blockchains and Stablecoins for Payments

Switching over to the digital currency world is still difficult despite the hurdles and success it brings to individuals. To some extent, countries like China went to the extent of banning any form of crypto transactions. However, digital payments’ future seems more evident as the Office of the Comptroller of the Currency (OCC) recently allowed stablecoin payments through banks. Asides from approving stablecoin remittances, the U.S based banks, and federal savings associations will be able to leverage the blockchain technology.

As per OCC’s report, financial institutions can operate nodes on an independent node verification network(INVN). Provided banks run on genuine and fair practices; they are free to initiate nodes and oversee stablecoin payments. But what impacts does the action have on the overall financial ecosystem?

Brief Details on the Report

Establishing a new age of stablecoin financial system has been in discussion with the President’s Working Group on Financial Markets. In the letter, the incumbent comptroller (Brian P. Brooks) elaborates that some of the innovative payment advancements are founded on blockchains.

According to Brian, the recent action will give banks the ultimate authority to act as validators for their customers on a fast and cost-effective system. On top of that, banks have a role in ensuring that INVN-related threats are dealt with accordingly.

Positive Impacts

The advancement by OCC may have a positive impact on the whole financial system. So what does the action bring to the table?

An Additional Trading Tool

Through OCC, traders now have a new type of digital asset that will reap multiple profits. Essentially, stablecoins are digital currencies tied to other assets or fiat currencies. The digital asset’s volatility levels are lower compared to regular cryptocurrencies in the market. Trading risks involved are manageable, considering that stablecoin assets are backed by another valuable asset such as gold.

Fast Operations

Transaction settlements with traditional financial institutions tend to be slower. Once banks harness blockchains’ capabilities, stablecoin transaction operations will be settled in a matter of seconds. In the end, an investor will save on time as the banks using blockchains will cover a vast number of transactions.

Expands the User-Base

Banks and federal savings associations will expand their user-base as individuals would want to trade with a fast and affordable ecosystem. A robust system will gain more recognition, thus encouraging even more trader onboarding.

Custodial Services

Investors with valuable stablecoin assets can store them with banks for safe custody. In normal circumstances, assets get misplaced or stolen beyond recovery. Handing over assets ensures a customer’s belongings are secure from unauthorized hands.


Individuals are accustomed to receiving financial services from banking institutions. The customer’s trust levels will consequently increase after learning that their go-to bank is supporting stablecoin payments. In return, the financial institutions will guarantee professionalism towards their customers while employing consumer protection practices.


The entire transactional functionality is under the bank’s watch; therefore, the chances of hacking the system are slim. Banks will provide additional security measures as the nodes act upon any suspicious activity on the public ledger.

Global Payment Capabilities

Transferring funds across the border today takes more extended periods, and, on some occasions, account holders may fill out unnecessary paperwork. This aspect mostly affects merchants running businesses who find a hard time transacting with potential buyers. On the bright side, sellers or any other user accepting stablecoin payments receive their funds instantly.

Negative Impacts

There is still a security concern that may emerge now that users can make stablecoin payments. Banks will typically function as the intermediary body validating transactions on a blockchain. Due to this fact, nothing can stop the financial institutions from accessing the public’s funds and getting away with them. 

Heavy Reliance on Traditional Market Trends

Stablecoins are backed by assets such as fiat currencies, which are prone to inflation. Unlike cryptocurrencies, which rely on the forces of demand and supply, stablecoins heavily rely on an asset’s price, increasing at a slower rate.

Regulatory Standards

Similar to cryptocurrencies, stablecoins are not regulated in any way. Therefore, the absence of compliance laws limits users from accessing the banking services as eligible investors follow the regulations.

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Forms of Stablecoins

There exist three types of stablecoins, namely:


These stablecoins are pegged with cryptocurrencies such as ethereum, bitcoin, and many more. 


Fiat-backed stablecoins are digital assets tied to the regular fiat currency, such as the U.S dollar. The structure of fiat-backed stablecoins operates at a fixed ratio of 1:1. Compared to crypto-backed stablecoins, fiat-pegged stablecoins are less volatile hence offering the ultimate stability methods. An example of fiat-backed stablecoins includes Tether(USDT), Paxos Standard(PAX), and Gemini Dollar(GUSD).

Non-Collateralized Stablecoins

Running on a Seigniorage Shares system, non-collateralized stablecoins sell digital assets through a smart contract. The non-collateralized tokens utilize algorithms to monitor their pegged value without any collateral requirements.

Final Word

The OCC’s decision to allow banks to transact stablecoins signifies its faith that virtual currencies are globally the future of the financial sector. Furthermore, it solidifies the fact that fiat currencies are more involved in illegal transactions than crypto.

This allows banks to ease crypto despite the popular vilified belief. In turn, this action acts as a propeller of service, efficiency, customer satisfaction, and crypto mass adoption. At the same time, stablecoins still pose a few challenges that can affect the OCC implementation. 

However, every investment requires sacrifice, which can turn out positively or negatively. Otherwise, OCC’s letter seems like a good sign for the crypto payments and financial sector. 

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